Calculate Depreciation Reductions Before You Buy A Property


Expert Advice: by Tyron Hyde

Washington Brown has created Australia's first and only tax depreciation calculator that allows you to estimates the potential depreciation deductions before you buy a property.

All you do is punch in the expected purchase price of the property, and based on a collection of real life analysis, an estimated depreciation amount is calculated.

But what if you are building a house - what are the likely depreciation deductions then?

Unfortunately, there's no calculator on the market that can make this estimation, so in this month's QS Corner I've created a "ready reckoner" to help estimate the potential depreciation on the construction of an investment property.

So if you are thinking about engaging a builder to build your investment property here are the percentages you can use in relation to your construction contract value.

Year 1:  6%.   Year 2:  4.5%.        Year 3:  4%.       Year 4:  3.75%.      Year 5: 3.5%.

That means...if my house cost $200,000 to build, I could expect a $12,000 depreciation deduction in Year 1, and a $9,000 deduction in Year 2....etc.

This guideline is best used for construction costs less then $500K. Any higher and the ratio's are likely to decrease. So if you need further clarification, don't hesitate to contact us.

Tyron Hyde is a director of quantity surveying firm Washington Brown. For more QS Corner tips and information on property depreciation including a FREE online tax depreciation calculator, visit

To read more Expert Advice articles by Tyron Click Here

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.


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